On August 27, the Hong Kong Securities and Futures Commission released its second-quarter operating report.

For friends who play Hong Kong and U.S. stocks, this is a must-see report.

Because it will not only summarize the number of IPOs, financing amount and capital flow in the current quarter, but also disclose approval efficiency and new policy trends in a timely manner.

It can be said that by reading the quarterly report, we can seize the lead faster in the new fast pace of Hong Kong stocks and project differentiation.

Cris read the second quarter report and it was quite interesting. Overall, there are three highlights to share with you.

First, with the official seal, Hong Kong stock IPOs have entered a veritable explosion period.

In the second quarter, the amount raised by the Hong Kong Stock Exchange surged 610% year-on-year, reaching HK$128 billion. The Ningde Times alone raised US$4.7 billion, setting the world's largest IPO this year.Mainland leaders such as Hengrui Pharmaceutical, Haitian Flavor, and Shanhe Intelligent have landed one after another, and each fundraising scale has exceeded 100 million US dollars.

In the first seven months, the net inflow of capital from the south was HK$731.2 billion, accounting for 23% of the total transactions. The average daily turnover was HK$243.7 billion, a year-on-year increase of 85%. This wave of liquidity supported the valuation of new shares, and the probability of "winning the bid will be broken" has dropped significantly.

In the second quarter of this year, there were 27 initial public offerings in Hong Kong stocks, raising a total of HK$88 billion, an increase of more than 900% over last year.

With such a large amount of funds raised, subscription popularity is still booming-consumer IPOs have received an average of more than 1700 times subscriptions, and the hunger for funds is visible to the naked eye.Hong Kong has returned to the top echelon of global IPOs and has a solid position.

PricewaterhouseCoopers predicts that the Hong Kong Stock Exchange will have 90-100 initial public offerings throughout the year, with financing exceeding 200 billion yuan.

Second, approval efficiency is extreme.

The Hong Kong Stock Exchange has launched a "special line for science and technology enterprises", allowing technology and biotechnology companies to attend meetings in 40 working days, more than twice as fast as A-shares.

In addition, the implementation of the "confidential form delivery" mechanism is also accelerating. AI and semiconductor companies such as Biren, Enflame, Smart Spectrum AI, and MiniMax have lined up and will usher in an intensive wave of technology IPOs in the next few months.

Different from the A-share structure of "traditional manufacturing + new energy-led", Hong Kong stocks are accelerating their embrace of emerging industries such as AI, semiconductors, and biomedicine. The valuations of these industries are generally lower than those of U.S. stock benchmarking companies, but their growth is more imaginative.

It should be noted that too fast the pace may also lead to "mixed things". Some companies may just rush to grab the window concept to go public first. Whether the real commercialization and financial quality can withstand the test still needs to be carefully screened.

Third, virtual assets have become new variables.

At present, Hong Kong has approved 11 licensed trading platforms, and 9 are in line; it was the first to launch Bitcoin and Ethereum spot ETFs in 2024, and the number has increased to 9, and allows pledge business, directly leading the Asia-Pacific region.Institutions such as HashKey and OSL have obtained licenses one after another, and 43 institutions have been able to provide virtual asset transactions.

Judging from the current situation, the listing of digital asset companies in Hong Kong is a high probability event.

The reason why Hong Kong's virtual asset ETFs have attracted attention is that globally, only the United States and Hong Kong open spot ETFs at the same time, and Hong Kong's further liberalization of pledges is equivalent to adding income-enhancing tools and making it easier to attract Asian high-net-worth funds and hedge fund allocation.

However, virtual asset prices fluctuate greatly and are highly dependent on global regulation and the Bitcoin cycle. Once ETF trading volume declines, related concept stocks may also face a rapid decline in valuations.

What do the above three points mean for new customers?

First of all, the characteristics of Hong Kong stocks in the second half of the year are "large project volume and differentiated quality."

Although market sentiment was driven by giants like the Ningde era in the first half of the year, what actually makes money is the big ticket leader and growth track.The former is due to its large size, stable industry, and restrained valuation, which is easy to attract funds; the latter is because the company's valuation is lower than the U.S. stock benchmark, with few short-term breakdowns and long-term flexibility.

However, although some unpopular industries, such as traditional consumption and real estate, will be launched one after another, they have poor liquidity, low valuations, little attention in the secondary market, and almost no allocation value in the second half of the year.After the new regulations on Hong Kong stocks, you can also take a look at the allocation of these targets. If you choose Plan A, basically it means that the takeovers have not escaped.Having too many projects does not mean playing casually.

It is best to use layers to raise new funds, with 60% with the certainty of large votes, 30% to grow the track, and 10% to retain a motor position. In this way, we can keep the funds rotating as much as possible and not miss the opportunity to eat meat.

Secondly, the efficiency of approval has improved in the second half of the year, and fund management must keep up.

In the past, the pace of Hong Kong stock IPOs was slow, and funds were often "lying" in accounts.

Now the "technology-enterprise special line"+"confidential form submission" allows technology companies to attend meetings within 40 days. In the second half of the year, it is expected that the pace of new shares will be more intensive, and there may even be a situation of "three or four consecutive orders a week."

On the one hand, if the securities firm has sufficient financing lines, it may have to switch positions more frequently in the second half of the year.When the choice of play changes from "waiting for the rabbit" to "flow work", the new focus becomes to screening high-quality targets, rather than treating all opportunities equally.

On the other hand, because the approval process is fast, the quality will inevitably vary. Some companies may just "grab the window" and have a high probability of losing the award after winning the contract. At this time, they must do their best.

When the pace accelerates, the new battle changes from a single point battle to a combination battle, so the core of the second half of the year is not "whether to fight or not", but "how to allocate positions."

Finally, let's talk about virtual ETFs.

At present, Hong Kong's virtual asset ETFs are definitely ahead of Asia. Currently, nine spot ETFs are traded in Hong Kong and pledge is allowed. This is an institutional innovation.SFC has approved 11 licensed platforms, and HashKey, OSL, etc. are expanding at a rapid pace.

What does this mean?

For the primary market, it is likely that virtual asset exchanges and blockchain infrastructure companies will go directly to Hong Kong for listing in the future, opening up a new track.

For the secondary market, after the liquidity of virtual asset ETFs increases, funds will be more willing to allocate relevant new shares, which will have a large room for speculation, but the volatility is also high.

However, from the perspective of playing style, this type of ticket can be participated in in small positions and cannot be used as the main track. However, as the "high beta in the combination", it is suitable for short-term trading, and new trading in small positions may have unexpected gains.

To sum up in one sentence, the new expansion of Hong Kong stocks in the second half of the year will involve both a blowout in quantity and an acceleration in pace, accompanied by industry differentiation.

Finally, I will add a list of hard indicators for everyone to quickly identify risks when screening projects in the second half of the year.

• Ultra-high P/P/E ratio: If the valuation of similar companies in U.S. stocks and A shares is only 5-10 times, and the price of Hong Kong and new shares is above 20 times, we must be careful about short-term overdrafts.

• Distortion of subscription multiple: On the surface, there are thousands of subscriptions, but if the proportion of international placements is too large and the proportion of retail placements is extremely low, it often means that there is insufficient real demand, which is a typical "data beautification".

• The purpose of financing is ambiguous: If more than half of the funds raised in the prospectus are used to "replenish current" or "repay debts" rather than explicitly expand production and research and development, the probability of such a company breaking in the short term is extremely high.

• Shareholder reduction structure: If old shareholders take advantage of the IPO to cash in large amounts, it means that they lack confidence in the company's prospects and will subsequently be under pressure on the secondary market.

• Broker underwriting echelon: Projects underwritten by top investment banks (such as CICC, Morgan Stanley, CITIC, etc.) are usually of more stable quality; if brokerages with poor records are alone, they should be extra vigilant, especially Huatai, whose record is too poor. People have to guard against it.

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